Ólafur Thorlacius (1761–1815) set up business in Bíldudalur following the end of the Danish trade monopoly.

[citation needed] In the late 20th and early 21st centuries, the decline of the fishing industry and the imposition of strict quotas by the Icelandic government led the town to diversify its economy.

The village is now home to a factory, which provides employment to many residents, processing a mineral-rich algae found in abundance in the fjord.

The village is also becoming a popular tourist destination, especially for fishing trips and for artists seeking to gain inspiration from the spectacular scenery.

[citation needed] Close by the town there is also a fjord of literary significance, Geirþjófsfjörður, where the Icelandic Gísla saga was played out.